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Korea should adapt its migration programmes to ensure continued success in the face of expected challenges

28/01/2019 – Korea should adjust the categories and rules of its different labour migration programmes to better match labour migration to short-term and structural labour needs, according to a new OECD report.

Recruiting Immigrant Workers: Korea says that the country’s labour force is struggling to replace retiring workers in less skilled jobs. The number of youth aged 25-34 with less than tertiary education fell from 4 million to 1.4 million between 2005 and 2015 and will shrink below 1 million by 2025, even as many older workers retire. Vacancies for certain jobs have become difficult to fill.

While the share of foreigners, about 3.7% of the active population, is still low in international comparison, it has increased sharply over the past decade, partly due to one of the largest temporary labour migration programmes in the OECD. About 60% of foreigners in Korea today came through a work-visit programme for ethnic Korean Chinese or as temporary labour migrants under a specific scheme, the Employment Permit Scheme (EPS). They contribute to an increase in the foreign population between 2005 and 2015 which was the steepest in the OECD.

Foreign workers are primarily employed by SMEs, especially in the manufacturing sector, where they comprise 10% of employment, up from less than 2% a decade earlier. About one in ten employers with more than five employees rely on filling at least some vacancies with foreign workers. Korean workers in these jobs tend to have high turnover, and the job quality is low, but foreign workers generally work maximum overtime at minimum wage and stay with these firms for longer periods.

The report notes that EPS, which admits about 60 000 workers annually under a quota fixed by the government, strikes a balance between the employer and the worker. It contains a number of protections to prevent negative effects on local workers and to safeguard the rights of foreign workers. While the labour market test of vacancies is relatively light compared to other OECD countries, employers are assigned workers according to how they perform on a points scale considering efforts to recruit locally as well as compliance with programme rules. Bilateral agreements with partner countries and several steps of selection limit the possibility for rent-taking which plague such programmes in many other countries. The report recommends that, given the high level of state involvement in managing the programme, more effort could be made to provide foreign workers to those employers who improve conditions and recruit more local workers.

The OECD review points to the limited wage growth of EPS workers over the stay in Korea and notes that mobility restrictions may make it difficult for workers who have or who develop higher skill levels to bargain for higher wages. The initial programme requirements of language ability – more than 1.7 million candidates have taken the Korean language exam since it was first offered – have expanded. Changes in the programme to select for and prioritise higher-skill workers, and to extend stay to up to 10 years for higher productivity workers, may turn the programme into more than just an unskilled labour migration scheme, warns the OECD. The report recommends re-examining mobility options and the bridge to other, renewable, work permits.

The report notes that Korea, despite policy efforts to attract and retain highly qualified foreigners and international talent, has very low flows of highly qualified migrants. Korea has many overlapping visa categories and skilled or highly qualified immigrants in Korea can cycle through many statuses during their stay. A points-based system for accelerated access to permanent residence favours education, but is only open to applicants who are already resident, and has not been evaluated to adjust the weights. The OECD recommends the PBS be opened to all candidates and monitored more closely. More broadly, the report recommends reviewing the current visa system to improve clarity and distinguish between occupations which should be labour market tested and those which should be granted more favourable access and residence conditions.

Korea has tripled its share of the international study market in the past decade. Yet the report notes that 15% of graduating international students stay on in Korea, low compared to other countries. Many stayers are on a job-search permit which is generous in international comparison, but the challenging job market for international graduates means few find work. This limits the potential of the international study channel to play the role of providing talent which it plays in other countries, even if enrolment is rising.